My IntraFish

The farmed shrimp industry keeps making this same mistake

When will the industry learn the basic dynamics of supply and demand?

The current collapse of farmed shrimp prices doesn’t surprise me, but it does shock me how much greed and how little common sense there is in an industry whose only chance to thrive in the future is with sustainable practices.

The vannamei sector -- an industry not unfamiliar with overstocking, disease epidemics and the consequent years of low investment and slow recovery -- is in trouble once again.

Global prices are down and declining, and they aren't expected to hit bottom until June, when farmers stop stocking and demand during the summer season kicks in. After that, the industry is hopeful Christmas will save the year. But then what? Will producers begin stocking above market capacity again, encouraged by a seasonal high demand and recovering prices? History tells us yes.

Unfortunately, we have seen this in the sea bream and bass sector as well: a product once seen as premium by consumers being sold at bargain prices as producers struggle to be competitive and profitable in a market flooded with cheap fish.

Vannamei shrimp price situation ‘unsustainable’

We’ve also seen it in salmon farming, with Chile only overcoming its own demons after leaving behind the utopian idea of self-regulation and collaborating with the government to implement effective regulations that could stop them from doing what they knew was killing them -- overstocking.

So, will shrimp producers need a watchdog looking over their business to stop them throwing themselves off the precipice? Seems like they may.

On one hand, in South America, Ecuador learned its lesson when the white spot crisis hit the country and producers jumped onto the sustainability wagon.

At the moment, it is the only Latin American country producing significant amounts of vannamei, at just under 400,000 metric tons. Other farmers in the region farm shrimp with extensive methods.

But this is not to say that they are not significantly increasing volumes year-on-year.

On the other hand, Asian producers using intensive methods are farming Specific Pathogen Resistant (SPR) vannamei, an imported species, at levels that haven’t been produced before.

New CEO-led shrimp sustainability initiative launched

Though it’s hard to imagine, Asian producers only began farming vannamei in 2000, and at the time the total output accounted for just 0.2 percent of the 1.2 million metric tons of shrimp produced on the continent. In 2018, around 72 percent of the 4 million metric tons of shrimp produced in Asia will be vannamei.

According to estimates by the Global Aquaculture Alliance (GAA), global vannamei production could hit 3.5 million metric tons in 2018, based on growth estimates of 4.5 percent year-on-year.

However, industry sources are pointing to an increase of production of between 15 and 20 percent on last year’s volumes so far.

In Asia, there have been several attempts over the years to set a bottom low price mark, but it has never been respected by producers.

Is the global shrimp market in danger of oversupply?

In addition, the lack of traceability and the production fragmentation, mainly made up by small farmers seeding ponds in their backyards, makes it harder to implement an effective sustainability program.

There have also been warnings by importers about the use of antibiotics, which, if actually implemented, would force overstocking countries to reduce their use of the treatment and farm using better sanitary conditions. However, forces such as the European Union do not seem to go beyond the warnings.

So, what will it take?

It would be a nice change to see an industry learning from the mistakes of the past, or to at least see that all those millions invested are worth it.

It won’t be governments or the environment telling producers enough is enough. It will be the market, once again. And again. And again.

Access to the leading source of daily news and information for the global seafood industry

Continuous exclusive global news and insight

Full article search access to 20 years of business intelligence

Found an interesting story?

The farmed shrimp industry keeps making this same mistake

When will the industry learn the basic dynamics of supply and demand?

The current collapse of farmed shrimp prices doesn’t surprise me, but it does shock me how much greed and how little common sense there is in an industry whose only chance to thrive in the future is with sustainable practices.

The vannamei sector -- an industry not unfamiliar with overstocking, disease epidemics and the consequent years of low investment and slow recovery -- is in trouble once again.

Global prices are down and declining, and they aren't expected to hit bottom until June, when farmers stop stocking and demand during the summer season kicks in. After that, the industry is hopeful Christmas will save the year. But then what? Will producers begin stocking above market capacity again, encouraged by a seasonal high demand and recovering prices? History tells us yes.

Unfortunately, we have seen this in the sea bream and bass sector as well: a product once seen as premium by consumers being sold at bargain prices as producers struggle to be competitive and profitable in a market flooded with cheap fish.

Vannamei shrimp price situation ‘unsustainable’

We’ve also seen it in salmon farming, with Chile only overcoming its own demons after leaving behind the utopian idea of self-regulation and collaborating with the government to implement effective regulations that could stop them from doing what they knew was killing them -- overstocking.

So, will shrimp producers need a watchdog looking over their business to stop them throwing themselves off the precipice? Seems like they may.

On one hand, in South America, Ecuador learned its lesson when the white spot crisis hit the country and producers jumped onto the sustainability wagon.

At the moment, it is the only Latin American country producing significant amounts of vannamei, at just under 400,000 metric tons. Other farmers in the region farm shrimp with extensive methods.

But this is not to say that they are not significantly increasing volumes year-on-year.

On the other hand, Asian producers using intensive methods are farming Specific Pathogen Resistant (SPR) vannamei, an imported species, at levels that haven’t been produced before.

New CEO-led shrimp sustainability initiative launched

Though it’s hard to imagine, Asian producers only began farming vannamei in 2000, and at the time the total output accounted for just 0.2 percent of the 1.2 million metric tons of shrimp produced on the continent. In 2018, around 72 percent of the 4 million metric tons of shrimp produced in Asia will be vannamei.

According to estimates by the Global Aquaculture Alliance (GAA), global vannamei production could hit 3.5 million metric tons in 2018, based on growth estimates of 4.5 percent year-on-year.

However, industry sources are pointing to an increase of production of between 15 and 20 percent on last year’s volumes so far.

In Asia, there have been several attempts over the years to set a bottom low price mark, but it has never been respected by producers.

Is the global shrimp market in danger of oversupply?

In addition, the lack of traceability and the production fragmentation, mainly made up by small farmers seeding ponds in their backyards, makes it harder to implement an effective sustainability program.

There have also been warnings by importers about the use of antibiotics, which, if actually implemented, would force overstocking countries to reduce their use of the treatment and farm using better sanitary conditions. However, forces such as the European Union do not seem to go beyond the warnings.

So, what will it take?

It would be a nice change to see an industry learning from the mistakes of the past, or to at least see that all those millions invested are worth it.

It won’t be governments or the environment telling producers enough is enough. It will be the market, once again. And again. And again.

Already a subscriber? Log in here:

NHST Global Publications AS use technologies such as cookies and other tracking scripts to analyse trends, administer our services, track user movements and to gather information about our whole user base. Unregistered users may opt-out of such tracking in the browser settings by ticking off “do not track me”. Read our cookie policy here.